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Observing that a continued coordinated policy response to fight COVID-19 including through vaccines is critical to overcome the ongoing health crisis, the International Monetary Fund (IMF) has said that addressing the long-standing reform priorities and improving education outcomes will be key to help minimize adverse medium-term impacts from the pandemic and further boost long-term growth in India.

It further said providing fiscal resources to the health sector and social support to the most vulnerable also remain policy priorities. It said while fiscal space has narrowed, fiscal policy can and should continue to play a key role in facilitating a strong, inclusive and green economic recovery, and help avoid an adverse, longer lasting impact. It said additional fiscal support is warranted until the recovery is fully entrenched, including additional spending on health and to support the most vulnerable groups.

IMF has stated that policy space can be enhanced through a credible and clearly communicated medium-term fiscal consolidation strategy that outlines a gradual removal of policy support and revenue enhancing measures. It also said that while closely monitoring elevated inflation pressures, maintaining accommodative monetary policy remains appropriate until growth begins to firmly recover. It added that financial sector and regulatory policies should support the recovery while allowing the exit of non-viable firms and encouraging banks to continue building capital buffers and recognize problem loans.